How easy is it to mediate complex commercial contract disputes?

May 11, 2015

 

What’s your instinctive response? The answer depends on both your practical experience of mediation, (and other forms of ADR), and, on a higher psychological level, your personality build. To the pessimists out there, stay with me...

 

We instinctively shy away from mediation in complex contract disputes because the issues seem too “difficult” to break down into mediate-able pieces. There are so many factors to weigh in the balance it makes your head spin. Plus, put some lawyers in the mix, who are trained in rights and wrongs, and evidence and fact and all that that entails (spoiler: I am one), and we’re on a rollercoaster of a ride before someone has pressed the start button. All of these factors contribute to whether the idea of mediation even gets off the ground. I mean, really gets off the ground, not just a nod to satisfying the court with “let’s try it”, and then a few weeks later trotting out the usual “we don’t think this case is suitable” (without explaining why, precisely). Really, there are not many good reasons not to try. You’d be surprised what pops out the other end when real effort is made by both (or all) sides. If you think about it, mediation is an area in which the parties can actually agree about a disagreement! You both (all) want the same thing – resolution!

 

Let me set out 3 key reasons why mediation should be at the top of your menu of options in trying to resolve complex disputes:

  1. Cost – litigation or arbitration costs are phenomenal. Enough said. Even where money seems to be no object, it’s going to hurt if you lose. And someone will, in whole or in part. A sobering thought. Even if you win in whole, you’re likely to be awarded about 70% of your costs. So you have to be prepared to “invest” c. 30% anyway. Mediation costs are much lower. Always. And there is no order at the end to pay someone else’s costs.

  2. Relationships – there is only a handful of organisations which are big enough to deliver major infrastructure projects, and which can draw upon broad expertise and supply-chain efficiency. If you fall out with all of them, who is going to make your next dream a reality? Get over the emotion, and engage! Court hearings are not the way to maintain relations and build strong connections.

  3. Purpose – courts exist to decide rights and wrongs. Mediators do a different job. They try to help the parties to find a way through, an answer that works for both (all) parties. Surely that is a good thing to aim for? Then everyone can go home happy.

Convinced? Here are some tips to maximise your chances of success:

  1. Preparation – treat it as seriously as a court hearing. It is not good enough to turn up for a collaborative chat with a mediator, and hope to come away with a settlement. It requires team work from all involved. It requires imagination, commercial nous, an honest appreciation of the strengths and weaknesses of the case, a hard look at conduct and behaviour. What has gone wrong? What could we have done better? What did we not get from our contracting partner, which has disappointed us and made us feel dissatisfied? What would we like from them next time (because we’d like a next time, that’s why we’re here)?

  2. Attitude – Attend the mediation with the aim of mutual resolution in your mind. Step through the door with a can-do mindset. It might not be your natural way of being, and this is where your psychological make-up plays it part. It’s very complex and to some extent, requires rewiring of instinctive reactions, as well as trained habits. First step is to be aware of yourself, critically if necessary: what can I bring to this mediation? Who may I find it difficult to deal with? What could I have done better? How can I contribute to resolving this mess? Of course, it is natural that you will want to express your feelings about “rights and wrongs”, and the open (round table) session is your chance to put them out there. But don’t dwell on them doggedly or they will colour your ability to consider the bigger picture, as well as wear down the other party. Acknowledge the other party’s position, openly. Express a genuine wish to resolve and move on.

  3. Stick at it – There are going to be difficult moments. For example, when you hear for the first time a description of something, which really annoyed the other party (“why didn’t you bring it up before”? “We did, but you weren’t listening”).

  4. Thick skin - Try not to take personally things that are said. The mediation is not a controlled atmosphere like a court hearing. You can let it out. It is confidential and no one will mind. Big projects can make big boys (and girls) cry. But how you deal with the inevitability of disputes arising is what makes the next project better than the previous one. 

Any pessimists out there re-evaluating their scepticism?

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This article was first published on Lexis®PSL on 9 November 2016.

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